Netflix to FCC: Data Caps Are Illegal

Cable operators disagree, saying commission should stick with broadband deployment
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Related: Intelligence Squared Seeks Oxford-Style TV Debates

Online video giant Netflix is telling the FCC that data caps and usage-based pricing are a threat to broadband deployment, adding that they violate the congressional mandate on advanced communications services.

According to comments with the FCC on its upcoming report on advanced telecommunications, Netflix, not surprisingly, wants ability to access video to be the test of whether broadband is being deployed in a reasonable and timely manner.

Internet service providers, on the other hand, argue that usage-based business models help differentiate their services and manage bandwidth demands on limited capacity. Netflix—which relies on said bandwidth to serve customers hungry for online video—is pushing back hard, calling caps ineffective.

Netflix said any caps on fixed broadband service should be considered “inconsistent” with the Telecommunications Act, with “low data caps” on mobile networks disallowed as well.

Data caps, said Netflix, “discourage a consumer’s consumption of broadband, and may impede the ability of some households to watch internet television in a manner and amount that they would like.”

Netflix also took aim at zero-rating plans, in which providers exempt certain services from caps, a move ISPs say is pro-consumer and Netflix argues is potentially anticompetitive. Whether the FCC concludes that will likely determine the fate of usage-based pricing going forward.

The FCC has been collecting information for almost a year on usage-based pricing and zero rating under its net neutrality general conduct standard, which is a way for it to potentially regulate conduct not expressly prohibited by its new Open Internet Order. FCC chairman Tom Wheeler has signaled that usage-based pricing could be an innovative business model, but also that the FCC will prevent anticompetitive behavior wherever it concludes it is occurring.

The National Cable & Telecommunications Association asked the commission to focus on what consumers need now to access popular applications, saying to do otherwise was unnecessary and going beyond its statutory mandate.

The NCTA said those out-of-bounds topics include “broadband subscription, performance consistency and usage allowances.”

Mobile broadband providers were even more pointed and expansive in their pushback, including on the ongoing FCC inquiry.

CTIA, which represents mobile broadband providers, told the FCC that free data programs and allowances (usage-based pricing) provide “greater choice, more data use and more innovation,” given the range of offerings and prices. In its FCC filing, CTIA added this is an incentive to use broadband “efficiently” and a way to expand access by “closing the digital divide”—zero-rating plans reduce consumer cost—and supporting “new apps and services.”

Related: Intelligence Squared Seeks Oxford-Style TV Debates

Online video giant Netflix is telling the FCC that data caps and usage-based pricing are a threat to broadband deployment, adding that they violate the congressional mandate on advanced communications services.

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